Drugstore.com projects $750 million revenue by 2013

By Stefany ZarobanDirector of Research

That would represent 64% growth from 2010 revenue for the health and beauty e-retailer.

Drugstore.com Inc., an online retailer of healthy, beauty and vision products, says it expects annual revenue of at least $750 million in 2013, with mobile and social media helping the company get there.

The company, which operates Drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com, has historically posted strong and growing sales numbers, but has yet to report an annual profit. The e-retailer projects net income of $15 million and ongoing adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of at least $41 million for 2013.

“Our market opportunity is expansive and although we are facing a competitive environment with margin pressure, I believe that we are executing on our strategy to strengthen and grow our leadership position,” says chief executive office Dawn Lepore.

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Outlining its growth strategy last week in a meeting with Wall Street analysts in New York, Drugstore.com, No. 46 in Internet Retailer’s Top 500 Guide, said it would focus on retaining and expanding its customer base, leveraging emerging marketing channels and increasing its reach into new market segments.

The company plans to expand its use of mobile technology and social media, an effort that includes the Facebook store the retailer launched last month. “Ultimately, we are using social networking to drive business,” said David Lonczak, chief marketing officer, during the event. “We have seen some very early positive signs that we can convert fans to customers.” Drugstore.com’s Facebook fan base went from 400 in June 2010 to more than 200,000 by late February.

Also, the e-retailer expects to increase conversion rates through web site upgrades that will be phased in over the next several weeks. Those upgrades include increased personalization and enhanced reviews that will do more to highlight what the company calls its unique health and beauty expertise. “It’s going to give us more real estate to highlight our value proposition,” Lonczak said.

Instead of increasing the number of items it sells, the e-retailer plans to focus on selling more products from such higher-margin categories as beauty and vision. “We are not trying to out-Amazon Amazon,” said Lepore. “We do have a brand that stands for health, beauty and wellness. We are really going towards these higher-value categories.”

The retailer plans to sell more of its products outside the United States and expects more than 200% growth in 2011 from its specialty sites. Those sites include SexualWellBeing.com, AtHisBest.com, TheNaturalStore.com, AllergySuperstore.com and VitaminEmporium.com.

For 2013, the company is projecting non-vision revenue of more than $660 million and vision revenue of more than $90 million. For the fiscal year 2010 Drugstore.com reported that sales increased 21.5% to $456.5 million from $375.6 million in 2009. The company posted a net loss of $3.6 million compared with a net loss of $1.4 million for 2009.